Value of IT in Online Visual Merchandising: A Randomized Experiment to Estimate the Value of Online Product Video

Abstract: E-retailers are increasingly using product videos on their websites to visually bundle their focal products with matching complementary products (accessories). While such dynamic and vivid presentation of product attributes in videos can increase product sales, providing excessive information in videos could cause information overload for customers and thus reduce sales. Moreover, it is not clear whether bundling such accessories in the focal product videos can have spillover effects on their sales. We conducted a randomized field experiment on the live website of a mid-size fashion retailer in the US to examine these issues and found that the introduction of product videos led to a 15 percent increase in the focal products sales and a 31 percent increase in the sales of accessories. We further examined the differential benefits to focal products and accessories from such bundling and found that, while unpopular accessories enjoy an increase in sales from their bundling in popular focal product videos, unpopular focal products do not get any increase in their sales due to their bundling with popular accessories. Moreover, we found that the sales of popular products (accessories) are not hurt due to their presentation with the unpopular accessories (products) in videos. Overall, our results show that visual bundling of accessories in focal product videos could be an effective strategy for multiproduct E-retailers interested in boosting the sales of their products and accessories. Our findings contribute to the literature on business value of IT by estimating an unexplored value of IT in online visual merchandising.